Can Reverse Mortgages REALLY Pay for Long-Term Care?

How Reverse Mortgages Can Fund Long-Term Care: As the cost of long-term care continues to rise, many retirees are exploring innovative ways to fund these expenses. In this video, Don Graves, president of the Housing Wealth Institute, author of three books on reverse mortgages, and adjunct instructor at the American College of Financial Services, offered insights into how housing wealth can play a crucial role in long-term care planning.
Graves began by outlining the fundamentals of reverse mortgages, emphasizing that a Home Equity Conversion Mortgage (HECM) provides homeowners with a line of credit that can grow over time. Importantly, this growth occurs independently of home value appreciation and is tied to interest rates, offering retirees increasing access to funds as they age.
When it comes to long-term care, Graves explained several strategies retirees can adopt. One option is leveraging the HECM’s growing line of credit to cover care expenses as needed, ensuring they have liquidity when health challenges arise. Additionally, homeowners can convert their line of credit into structured monthly payments—providing consistent cash flow to help cover insurance premiums or out-of-pocket medical expenses.
A key takeaway from the discussion was the importance of planning early. Graves noted that too many people wait until a crisis emerges to tap into their home equity, referring to it as a “break glass asset.” He recommends proactive planning, which allows retirees to secure favorable terms and reduce financial stress before care is urgently needed.
For those wondering about long-term outcomes, Graves clarified that if homeowners never use their HECM funds, they retain equity upon selling the house, with any remaining value returned to them or their heirs.
“Reverse mortgages can be a valuable tool in retirement planning,” Graves concluded, “but understanding how and when to use them is essential.”
With rising healthcare costs looming, tapping into housing wealth through reverse mortgages offers retirees flexibility and a reliable safety net for future care needs.